Glossarytaught in M5.02
Direct assignment
Also called DA, loan assignment, co-lending.
The outright sale of a pool of loans by one lender to another, usually a non-bank selling to a bank, with the seller continuing to service the loans.
It's simpler than a securitisation and achieves a similar result: the seller frees capital and books a gain, and the buyer acquires priority-sector or retail assets it could not originate itself.
In the related co-lending arrangement the two parties originate together, with the bank taking most of the exposure and the non-bank the customer relationship.
Income from these transactions is real and it isn't the same as spread income from a loan held to maturity. Separate them before you value the earnings.
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